Sudeep Shah, Head - Technical and Derivatives Research at SBI Securities
The domestic equity market witnessed a weak start on Thursday, with the Nifty opening sharply lower amid a broad sell-off in IT stocks. Persistent concerns over the potential impact of fast-growing AI start ups on traditional IT service companies triggered heavy pressure across the IT stocks. As a result, the Nifty IT index slumped 5.51%, dragging the benchmark indices lower through the session.
Despite the initial gap down move, the Nifty managed to stabilise somewhat but eventually closed near the 25800 mark, down 0.57%, forming a bearish candle with a minor lower shadow on the daily chart. The candle pattern reflects intraday attempts at recovery, although overall sentiment remained cautious.
From a technical standpoint, the benchmark index is still holding above its key moving averages, suggesting that the broader uptrend structure remains intact. However, momentum indicators point towards sideways consolidation in the near term, indicating a potential pause before the next directional move.
Among the Nifty constituents, Bajaj Finance and Shriram Finance emerged as top gainers, helping cushion some of the downside pressure in the index. On the other hand, IT majors Tech Mahindra, Infosys, and TCS featured among the top laggards following sector specific headwinds.
Sectorally, the market action was largely negative. Nifty IT and Nifty Realty were the biggest losers. Meanwhile, Nifty Financial Services and Nifty Consumer Durables managed to close in the green, displaying relative strength compared to the broader market.
The broader market also felt the heat of selling pressure. Both the Nifty Midcap 100 and Nifty Smallcap 100 ended in the red, though they witnessed a mild pullback from intraday lows, indicating some buying interest at lower levels. Market breadth remained weak, with the Advance/Decline ratio skewed in favour of declines. Within the Nifty 500 universe, as many as 371 stocks closed lower, underscoring the widespread nature of the correction.
Nifty View
Going ahead, for Nifty, the 50-day EMA zone of 25700-25670 will act as important support for the index. On the upside, the zone of 25900-25940 will act as an immediate hurdle for the index. Any sustainable move above 25940 will lead to a further upside rally up to the 26100 level in the short term.
Bank Nifty View
For the fourth consecutive trading session, the banking benchmark index Bank Nifty continued to trade in a narrow range of 432 points, which was the narrowest range in the recent period. Also, it is forming a small body candle, which shows a lack of commitment from both bulls and bears.
Looking ahead, the zone of 61200–61300 will be the immediate resistance to watch. A sustained breakout above 61300 has the potential to trigger further upside towards 61800, and eventually 62400 in the short term as momentum builds. On the flip side, the zone of 60400–60300 will act as a key support area for the index. As long as Bank Nifty holds above this support band, the broader structure is expected to remain positive, with dips likely to attract buying interest.